Earlier yesterday, Bio-Thera Solutions Ltd (688177: SH) went public on the Star Market of the Shanghai Stock Exchange (SSE) at CNY 32.8 per share, raising a fund of CNY 1.97 billion (USD 280 million). As of yesterday, the share price had closed at CNY 60.2, making its post-IPO value CNY 24.9 billion (USD 3541 million). (USD/CNY 7.023 as of February 21, GMT).
As reported last year, Bio-Thera submitted an IPO application to the China Security Regulation Commission (CSRC) under the fifth standard, which allows non-profitable companies with a substantial market scale to be listed if valued over CNY 4 billion (USD 569 million). The up to CNY 2 billion raised will bankroll its development of pipeline and clinical trials, and support the launch of its first drug in the market this year.
Founded in 2003, the Guangzhou-based innovative biopharmaceutical firm has focused research on tumors, autoimmune diseases and cardiovascular diseases. According to its prospectus (in Chinese), the company has not profited yet, with a net loss of CNY 136.6 million (USD 19.4 million), CNY 235.5 million (USD 33.5 million) and CNY 553.1 million (USD 78.7 million) from 2016 to 2018 respectively, and expects to continue this trend in the coming period.
As many other pre-revenue biotech firms, Bio-Thera has been throwing heaps of capital at research and development. In the first half of 2019, it spent CNY 1.6 million (USD 0.23 million) per R&D employee to drive innovation. By comparison, Zelgen (688266:SH), its closest rival in the anti-tumor field, could boast only CNY 0.7 million (USD 0.1 million) in the same period.
One of its medicines, Adalimumab BAT1406®, for ankylosing spondylitis and rheumatoid arthritis, will be introduced as ‘Geleli (格乐力)’ to the market in early 2020. Another medicine, Batifiban BAT 2094®, targeting PCI preoperative antithrombosis, has been filed to NDA and is due to meet consumers in 2021. Besides, Bio-Thera has eight on-going pipelines in the clinical phase and 11 candidate drugs under research. Among all these, some are into the third clinical phase while other domestic competitors are starting clinical phase one.
In the racing game of biopharmaceuticals, many companies seek public funds to support their substantial research and new drug development. Last year, Mabpharm (01281: HK), Henlius Biotech (02696: HK) and Sinomab Bioscience (03681: HK) went public on Hong Kong Stock Exchange, raising HKD 1.2 billion (USD 154 million), HKD 3.2 billion (USD 411 million) and HKD 1.4 billion (USD 180 million) respectively.
Undoubtedly, China’s security policies can lay a critical impact on the IPO path. Followed by Bio-Thera, Zelgen Biopharmaceuticals (688266: SH) was the first company to benefit from the fifth IPO standard. With the newly reformed refinance rule issued earlier this month, it should not be surprising to see more unprofitable companies rushing to the Star board soon.